U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended APRIL 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 0-17386
FISCHER-WATT GOLD COMPANY, INC.
--------------------------------------
(Exact name of small business issuer as
specified in its charter)
NEVADA 88-0227654
--------------------------- -------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
1621 North 3rd Street, Suite 1000, Coeur d'Alene, ID 83814
----------------------------------------------------------
(Address of principal executive offices)
(208) 664-6757
-------------------------
(Issuer's telephone number)
1410 Cherrywood Drive, Coeur d'Alene, ID 83814
----------------------------------------------
(Former address of principal executive office)
Check whether the issuer (l) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes [ } No
[X]
The number of shares of Common Stock, $0.001 par value, outstanding as of
September 30, 1996 was 31,196,760.
Transition Small Business Disclosure Format (check one):
Yes [ ] No [X]
<PAGE>
Part 1 - Financial Information
Item 1. Financial Statements
FISCHER-WATT GOLD COMPANY, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
April 30,
1996
ASSETS (Unaudited)
<S> <C>
CURRENT ASSETS:
Cash ...................................................... $4,12l,O00
Accounts receivable ....................................... 1,041,000
Due from related parties .................................. 28,000
Inventories ............................................... 196,000
Prepaid Expenses .......................................... 25,000
------------
Total current assets ......................................... 5,411,000
MINERAL INTERESTS, net ....................................... 2,990,0OO
PLANT, PROPERTY, AND EQUIPMENT ............................... 1,639,OOO
LESS ACCUMULATED DEPRECIATION ................................ (110,000)
------------
1,529,000
OTHER ASSETS ................................................. 40,000
------------
Total assets ................................................. $ 9,970,000
------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable .......................................... $1,796,OOO
and accrued expenses
Notes payable ............................................. 454,000
Income taxes payable ...................................... 91,000
------------
Total liabilities ......................................... $2,341,000
COMMITMENTS AND CONTINGENCIES,
Notes 1,3, 6
<PAGE>
<CAPTION>
SHAREHOLDERS' EQUITY:
Preferred Stock, non-voting,
convertible, $2.00 par value,
250,000 shares authorized;
0 shares outstanding ...................................... -0-
Common stock, $0.001 par value,
50,000,000 shares authorized;
31,187,160 shares outstanding
at April 1996 ............................................. 31,000
Additional paid-in capital .................................. 12,720,000
Foreign Currency translation
adjustments .............................................. 461,000
Deficit .................................................... (5,583,000)
------------
Total shareholders' (deficit) equity ......................... 7,629,000
------------
Total liabilities and
shareholders' equity ...................................... $ 9,970,OO0
------------
</TABLE>
The accompanying notes are an integral part of these balance sheets.
2
<PAGE>
FISCHER-WATT GOLD COMPANY, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
April 30,
1996 1995
----- -----
<S> <C> <C>
SALES OF PRECIOUS METALS ......................................... $ 1,057,000 $ -0-
COSTS APPLICABLE TO SALES ........................................ (1,533,000) -0-
------------ ----------
LOSS FROM MINING ................................................. (476,000) -0-
COSTS AND EXPENSES:
Abandoned and impaired
mineral interests ............................................. 3,000 22,000
Selling, general and administrative ........................... 269,000 69,000
Exploration ................................................... 66,000 3,000
------------ ----------
338,000 94,000
------------ ----------
OTHER INCOME (EXPENSE):
Interest income (expense) ................................. 26,000 (22,000)
Unrealized gain on trading securities ..................... -0- 50,000
Other (expense) income .................................... (5,000) (11,000)
Currency Exchange Losses, net ............................. (110,000) -0-
------------ ----------
(89,000) (17,000)
------------ ----------
Net loss before income taxes ..................................... (903,000) (76,000)
TAX PROVISION .................................................... -0- (1,000)
------------ ----------
NET LOSS ......................................................... $ (903,000) $(77,000)
------------ ----------
(LOSS) INCOME PER SHARE AND
COMMON EQUIVALENT ............................................. $ (.04) $ (.01)
------------ ----------
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING ............................ 25,420,000 12,344,000
------------ ----------
</TABLE>
The accompanying notes are an lntegral part Of these statements.
3
<PAGE>
FISCHER-WATT GOLD COMPANY, INC.
STATEMENTS OF CASH PLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
April 30,
----------------------------------------
1996 1995
------------ ------------
<S> <C> <C>
Net cash provided by (used in)
operating activities .................................................... (944,000) 26,000
----------- -----------
Net cash (used in) provided by
investing activities .................................................... 4,830,000 (28,000)
----------- -----------
Net cash provided by (used in)
financing activities .................................................... (31,000) 6,000
----------- -----------
NET INCREASE IN CASH ....................................................... 3,855,000 4,000
CASH, at beginning of period ............................................... 266,000 6,000
CASH, at end of period ..................................................... $ 4,121,000 $ 10,000
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Cash paid during the period for interest ............................... $ -0- $ 2,000
Cash paid during the period for taxes .................................. 18,000 -0-
SUPPLEMENTAL DISCLOSURE OF SIGNIFICANT
NONCASH ACTIVITIES:
Application of bonus on unproven
property to offset accrued
interest expense ...................................................... $ -- $ 25,000
Cost basis of trading securities
sold in connection with loss on
trading securities .................................................... $ -- 130,000
Securities issued in exchange for
professional services rendered ........................................ $ 18,000 -0-
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE>
FISCHER-WATT GOLD COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. Financial Condition and Liquidity
The accompanying financial statements are unaudited; however, in the opinion of
management, all adjustments (consisting only of normal recurring accruals)
necessary for a fair presentation have been made. These financial statements
and notes thereto should be read in conjunction with financial statements and
related notes included in Fischer-Watt Gold Company, Inc.'s ("Fischer-Watt" or
the "Company") Annual Report on Form 10-KSB for the year ended January 31, 1996.
Future Financing and Realization
While Fischer-Watt reported net income in fiscal 1996 principally as a result of
realizing gains on the sale or exchange of non-producing mineral properties, it
has an accumulated deficit of $4,900,000 and continues to experience negative
cash flow from operations and incur losses from mining. Management believes that
as the recently acquired producing gold mine property is further developed and
production levels increase, sufficient cash flows will exist to fund the
Company's continuing mining operations and exploration and development efforts
in other areas. Management anticipates achieving levels of production sufficient
to fund the Company's operating needs by the end of fiscal 1998 and until then
will fund operations with the cash raised in its March 1996 offering (see Note
6). The ability of the Company to achieve its operating goals and thus positive
cash flows from operations is dependent upon the future market price of gold,
and the ability to achieve future operating efficiencies anticipated with
increased production levels. Management's plans may require additional financing
or disposition of some of the Company's non-producing assets. While the Company
has been successful in raising cash from these sources in the past, there can be
no assurance that its future cash raising efforts and anticipated operating
improvements will be successful.
2. Unaudited Pro Forma Information
The following unaudited pro forma information has been prepared on the basis
that the acquisitions of Greenstone Resources of Columbia Ltd. ("GRC") and Great
Basin Management Co. Inc., ("GBM") had both occurred at the beginning of fiscal
1995. The unaudited pro forma information includes adjustments to depreciation
and depletion expense based on the allocation of the purchase price to the
property, plant, equipment and mineral interests acquired.
5
<PAGE>
Quarter ended April 30, 1995:
Sales of precious metals ............................. $ 585,000
Net income (loss) .................................... $ (777,000)
Net earnings (loss)
per common share ................................... $ (.05)
3. Accounts Receivable
Accounts receivable at April 30, 1996 consist of:
Taxes Receivable ..................................... $ 784,000
Trade ................................................ 250,000
Other ................................................ 7,000
----------
Total accounts receivable ............................ $ 1,042,000
4. Inventories
Inventories at April 30, 1996 consist of:
Finished products and
products in process ............................... $ 130,000
Supplies, materials
and spare parts ................................... 66,000
----------
Total inventories ................................... $ 196,000
5. Mineral Interests
Capitalized costs for mineral interests at April 30, 1996 consist of:
Operating mining property:
E1 Limon Mine, Oronorte District .................. $ 611,000
Less accumulated depletion ....................... 278,000
----------
333,000
Non-operating properties,
net of reserves:
E1 Carmen, Colombia ............................... 772,000
La Aurora, Colombia ............................... 219,000
Juan Vara, Colombia ............................... 5,000
Afghan-Kobeh, Nevada .............................. 647,000
Coal Canyon, Nevada ............................... 548,000
Red Canyon, Nevada ................................ 334,000
Tempo, Nevada ..................................... 50,000
Oatman, Arizona ................................... 10,000
Modoc, California ................................. 72,00O
----------
Total mineral interests ............................. $ 2,990,000
6
<PAGE>
6. Equity and Common Stock
In November 1995, the Company completed a private placement of 6,067,500 common
shares and 3,033,750 warrants to purchase common shares, The net proceeds from
this private placement of $816,000 are to be used to finance the expansion and
operation of the Company's E1 Limon gold mine in Colombia. Each warrant can be
exercised to purchase a common share for $0.30 through August 1997. Costs of
issuing these common shares and stock warrants totaled $94,000 and were
subtracted from the gross proceeds in determining the amount of additional paid
in capital.
The Company issued 4,125,660 common shares on January 29, 1996 in exchange for
all of the issued and outstanding common shares of GBM. The shares had an
estimated fair market value of $1,234,000 and the costs of the issuance of
$21,000 were subtracted from the proceeds in determining the amount of
additional paid in capital.
On March 12, 1996, the Company sold 9,960,000 common shares and 4,980,000
warrants to purchase common shares to investors located outside of the United
States pursuant to a Regulation S offering, The net proceeds from this offering
of $4,930,000 are to finance the Company's capital equipment and working capital
needs related to the further development and expansion of the Colombian gold
mining operation and the Company's exploration and development activities in
Colombia and Nevada.
Each of these warrants issued entitles the holder to purchase one additional
share of Fischer-Watt common stock at an exercise price of $.75 through February
28, 1998. These securities were not registered under the Securities Act of 1933
and may not be offered or sold in the United States absent registration or an
applicable exemption from registration requirements. Costs of issuing these
common shares and warrants totaled $348,000 and will be subtracted from the
gross proceeds in determining the amount of additional paid in capital.
Item 2. Management's Discussion and Analysis or Plan of Operation
The following is a discussion of Fischer-Watt Gold Company, Inc.'s (the
"Company") current financial condition as well as its operations for the three
months ended April 30, 1996 (fiscal 1997) and April 30, 1995 (fiscal 1996). This
discussion should be read in conjunction with the Financial Statements in Item 1
of this report as well as the Financial Statements in Form 10-KSB for the fiscal
year ended January 31, 1996 on file with the Securities and Exchange Commission,
as the discussion set forth below is qualified in its entirety by reference
thereto.
7
<PAGE>
Liquidity and Capital Resources
Short-Term Liquidity
As of August 31, 1996, the Company had $2,061,000 in cash and accounts payable
of $333,000. While Fischer-Watt reported net income in fiscal 1996 principally
as a result of realizing gains on the sale or exchange of non-producing mineral
properties, it has an accumulated deficit of $5,583,000 and continues to
experience negative cash flow from operations and incur losses from mining.
Management believes that as the recently acquired producing gold mine property
is further developed and production levels increase, sufficient cash flows will
exist to fund the Company's continuing mining operations and exploration and
development efforts in other areas. Management anticipates achieving levels of
production sufficient to fund the Company's operating needs by the end of fiscal
1998 and until then will fund operations with the cash raised in its March 1996
offering (see Note 6). The ability of the Company to achieve its operating goals
and thus positive cash flows from operations is dependent upon the future market
price of gold, and the ability to achieve future operating efficiencies
anticipated with increased production levels. Management's plans may require
additional financing or disposition of some of the Company's non-producing
assets. While the Company has been successful in raising cash from these sources
in the past, there can be no assurance that its future cash raising efforts and
anticipated operating improvements will be successful.
On April 30, 1996, the Company's current ratio was 2.3:1 based on current assets
of $5,411,000 and current liabilities of $2,341,000. On April 30, 1995,
Fischer-Watt's current ratio was .43:1 based on current assets of $305,000 and
current liabilities of $715,000. The improvement in the current ratio at April
30, 1996 is primarily related to the receipt of funds from the November and
March stock offerings, cancellation of a $500,000 note payable to Kennecott
Exploration Company related to the sale of the Company's 20% interest in the
Minas de Oro gold project in Honduras in May 1995, and the addition of accounts
receivable and inventory balances associated with the operating mine, all of
which are partially offset by the sale of trading securities, the addition of
accounts payable associated with the operating mine, and the addition of notes
payable incurred with the acquisitions of GRC and GBM (see discussions below).
8
<PAGE>
Pursuant to agreements among Greenstone Resources Ltd. ("Greenstone"), Dual
Resources Ltd. ("Dual"), and the Company, Greenstone made a payment of $300,000
to Dual to acquire 2,800,000 shares of Oronorte common stock for the benefit of
the Company. The Company's obligation to repay Greenstone this $300,000 is
evidenced by a note payable which bears interest at the rate of 10% per annum.
This note became payable, in full, on June 20, 1996 at which time the Company
withheld payment while negotiating the settlement of amounts owed to the Company
by Greenstone.
Prior to its acquisition by the Company, GBEM, borrowed funds from Serem Gatro
Canada Inc. This loan was evidenced by a note. The note payable is for monies
lent and advanced to GBEM by SGC during the period April 1, 1995, to May 31,
1995, as provided under the share purchase agreement among Serem Gatro, GBEM and
GBM made as of May 31, 1995. The note was to be repaid not later than September
30, 1995. and bears interest at 8%. Repayment of this note payable and related
interest is currently being negotiated with SGC,
Management believes that the Company has adequately reserved its reclamation
commitments.
Long-Term Liquidity
Cash flows from operations during fiscal 1998 are expected to be sufficient to
fund operating and administrative expenses and exploration expenses. The Company
may require additional funding from equity or borrowings if a major expansion at
its Oronorte property is necessary and cost justified or an acquisition
opportunity arises. At April 30, 1996 the Company had no long term debt compared
to $96,000 at April 30, 1995. The $96,000 consisted solely of a nonrecourse note
payable to Greenstone Resources Canada issued for the loan of funds to purchase
shares in Compania Minerales de Copan S, A. de C. V. Repayment was due in 1999
and the Copan shares were the sole security for the loan. This debt was settled
in conjunction with the sale of the Copan shares.
Results of Operations
The Company had net loss of $903,000 ($.04 per share) compared to net loss of
$77,000 ($.01 per share) in the quarter ended April 30, 1996 and 1995,
respectively. The most significant reason for this change is related to the
acquisition of the Oronorte project, which reported a loss from mining of
$476,000, general and administrative expenses associated with mining operations
of $135,000, and a loss from currency exchange of $110,000 in the quarter ended
April 30, 1996. There were no mining operations in fiscal 1995. Additionally,
the acquisition of GBM resulted in an increase in exploration expenses of
$63,000 in the quarter ended April 30, 1996, as compared to the quarter ended
April 30, 1995.
9
<PAGE>
Revenues
The Company had sales of precious metals of $1,057,000 representing 2,603 ounces
of gold and 2,464 ounces of silver in the quarter ended April 30, 1996.
Production costs totaled $1,533,000 for the initial period. There were no
comparable sales or costs in fiscal 1995. The Company does not presently employ
forward sales contracts or engage in any hedging activities.
Costs and Expenses
The cost of abandoned mineral interests decreased from $22,000 to $3,000 in
quarters ended April 30, 1995 and 1996, respectively, During the current fiscal
year, La Victoria with a cost basis of $3,000 was abandoned, and the Company
abandoned the Rio Tinto property in the first quarter of the prior fiscal year
1996 after a limited explorations program conducted at the end of fiscal 1995
and the beginning of fiscal 1996 could not confirm earlier mineral values.
Abandonments are a natural result of the Company's ongoing program of
acquisition, exploration and evaluation of mineral properties. When the Company
determines that a property lacks continuing economic value, it is abandoned. It
cannot be determined at this time when or if any of the Company's current
property interests will be abandoned.
Selling, general and administrative costs increased from $69,000 to $269,000 in
quarters ended April 30, 1995 and l996, respectively. The increase of $200,000
primarily relates to an increase in general and administrative expenses
associated with mining operations of $135,000, coupled with an increase in legal
and corporate relations expenses.
Exploration expense increased to $66,000 in the first quarter of fiscal 1997
from $3,000 in the first quarter of fiscal 1996. This increase is due to the
acquisition of GBM.
Net interest income (expense) increased from $(22,000) in fiscal 1996 to $26,000
in fiscal 1997. This increase is due to the elimination of interest accrued on
the $500,000 note to Kennecott offset by interest earned in the proceeds from
the November and March stock offerings.
The Company accounts for foreign currency translation in accordance with the
provisions of Statement of Financial Accounting Standards No. 52, "Foreign
Currency Translation" ("SFAS No. 52"). The assets and liabilities of the
Colombian unit are translated at the rate of exchange in effect at the balance
sheet date. Income and expenses are translated using the weighted average rates
of exchange prevailing during the period. The related translation adjustments
are reflected in the accumulated translation adjustment section of shareholders'
equity. The Company recognized a currency exchange loss of $110,000 in the
quarter ended April 30, 1996. There was no comparable gain or loss in the
quarter ended April 30, 1995.
10
<PAGE>
The Company is subject to inflationary pressures of the Colombian economy.
During the past year the rate of inflation in Colombia was approximately 20%,
wherein the currency exchange rate of the U.S. dollar to the Colombian peso
increased by only 8%. The Company is striving to implement cost-cutting measures
in an effort to reduce per unit production costs and increase production
efficiencies. However, there can be no assurance that the Company will be able
to achieve such cost cutting measures and production efficiencies. In addition,
the Company cannot anticipate what the future inflation and exchange rates will
be and therefore cannot accurately predict the aggregate effect of these
factors.
Commitments and Contingencies
Upon the purchase of GRC, the Company assumed GRC's liabilities related to
transactions governed by Colombian law concerning the movement of foreign
currency into and out of Colombia. The Colombian government has the right to
request an audit of foreign currency movement within a two year time frame. No
request or notice of an audit has been received from the Colombian government to
date. Therefore, the likelihood of a loss resulting from the actions of GRC
prior to the Company's purchase cannot presently be determined.
Oronorte is currently the defendant in several claims relating to labor
contracts and employee terminations which occurred during a labor strike. This
strike and the resulting terminations took place during the former ownership of
Oronorte. The estimated amount of the claims against Oronorte totals
approximately $200,000. In the event of an unfavorable outcome from Oronorte's
perspective, there is a likelihood that the Company would have the right to
claim indemnity from Greenstone Resources Canada Ltd. pursuant to the terms of
the agreements related to the acquisition of Oronorte.
In connection with the purchase of GRC, Greenstone agreed to reimburse the
Company for certain liabilities existing at the date of purchase in excess of
$1,000,000. At the present time, the Company has paid or identified as current
payables approximately $309,000 in excess of the $1,000,000. Management is
seeking to recover these excess liabilities from Greenstone and is unable to
determine Greenstone's ability or willingness to fund its share of these excess
liabilities in accordance with the terms of the purchase agreement and
accordingly has not recorded a receivable from Greenstone as of April 30, 1996.
11
<PAGE>
Statements which are not historical facts contained herein are forward looking
statements that involve risks and uncertainties that could cause actual results
to differ from projected results. Such forward-lookinq statements include
statements regarding expected commencement dates of mining or mineral production
operations, projected quantities of future mining or mineral production, and
anticipated production rates, costs and expenditures, as well as projected
demand or supply for the products that FWG and/or FWG Subsidiaries produce,
which will affect both sales levels and prices realized by such parties. Factors
that could cause actual results to differ materially include, among others,
risks and uncertainties relating to general domestic and international economic
and political risks associated with foreign operations, unanticipated ground and
water conditions, unanticipated grade and geological problems, metallurgical and
other processing problems, availability of materials and equipment, the timing
of receipt of necessary governmental permits, the occurrence of unusual weather
or operating conditions, force majeure events, lower than expected ore grades
and higher than expected stripping ratios, the failure of equipment or processes
to operate in accordance with specifications and expectations, labor relations,
accidents, delays in anticipated start-up dates, environmental costs and risks,
the results of financing efforts and financial market conditions, and other
factors described herein and in FWG's annual report on Form 10-KSB. Many of such
factors are beyond the Company's ability to control or predict. Actual results
may differ materially from those projected. Readers are cautioned not to put
undue reliance on forward-looking statements. The Company disclaims any intent
or obligation to update publicly these forward-looking statements, whether as a
result of new information, future events or otherwise, except as required by
applicable laws.
Part II - Other Information
Item 5. Other Information
As of September 30, 1996, the Company purchased certain unpatented mining claims
located in Esmeralda County, Nevada (the "Property"), from Kennecott Exploration
Company. At closing, the Company delivered to Kennecott Exploration Company a
promissory note in the amount of $700,000, due September 30, 1998, as the
purchase price for the Property, which is payable under certain conditions, at
the option of the Company, by the issuance of 1,000,000 (one million) shares of
the Company's common stock.
12
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits -
Exhibit Item 601
No. Category Exhibit
- --- -------- -------
1 2 Letter of Intent dated August 28, 1995 whereby
Fischer-Watt Gold Company, Inc., and Great Basin
Management Company, Inc., agree to form a business
combination and filed as Exhibit 1.2 to Form
10-QSB filed December 20, 1995 and incorporated
herein by reference.
2 2 August 28, 1995 agreement between Fischer-Watt
Gold Company, Inc., and Greenstone Resources Ltd.,
whereby Fischer-Watt agrees to purchase 100% of
Greenstone Resources Ltd.'s wholly-owned Colombian
branch, Greenstone of Colombia ("GOC") and filed
as Exhibit 2.2 to Form 10-QSB filed December 20,
1995 and incorporated herein by reference.
3 2 Closing Agreement dated October 20, 1995 among
Fischer-Watt Gold Company, Inc., and Greenstone
Resources Canada Ltd., and Greenstone Resources
Ltd., and filed as Exhibit 1.2 to Form 8-K filed
November 3, 1995 and incorporated herein by
reference.
4 2 Articles of Merger Merging GBM Acquisition Corp.,
into Great Basin Management Co., Inc., dated
January 25, 1996 and filed as as Exhibit 1.2 to
Form 8-K filed as Exhibit 1.2 to Form 8-K filed
February 5, 1996 and incorporated herein by
reference.
5 2 Plan of Reorganization and Agreement among
Fischer-Watt Gold Company, Inc., GBM Acquisition
Corp., and Great Basin Management Co., Inc., dated
January 3, 1996 and filed as as Exhibit 2.2 to
Form 8-K filed as Exhibit 1.2 to Form 8-K filed
February 5, 1996 and incorporated herein by
reference.
13
<PAGE>
Exhibit Item 601
No. Category Exhibit
- --- -------- -------
6 2 Mining Property Purchase Agreement dated
September 30, 1996, between Fischer-Watt Gold
Company, Inc. and Kennecott Exploration Company
("KEC") whereby FWG purchased mining claims owned
by KEC in Esmeralda County, Nevada, and, upon
closing, delivered to KEC a Promissory Note in the
amount of $700,000.
7 3 Articles of Incorporation. Filed as Exhibit 3.1
to Form 8 filed May 4, 1989 and incorporated
herein by reference.
8 3 By-Laws of the Corporation as amended. Filed as
Exhibit 6.3 to Form 10-KSB filed September 26,
1996 and incorporated herein by reference.
9 10 Letter Agreement between BMR Gold Corporation and
Fischer-Watt Gold Company, Inc., regarding the
America Mine Property effective September 20,
1989, and filed as Exhibit 19.1 to Form 10-Q filed
November 20, 1989 and incorporated herein by
reference.
10 10 Fischer-Watt Gold Company, Inc., non-qualified
stock option plan of May 1987 and filed as Exhibit
36.10 to Form 10-K filed April 23, 1991 and
incorporated herein by reference.
11 10 First Amendment to Exploration Agreement and
Mining Venture Agreement dated March 25, 1992
between Kennecott Exploration Company and
Fischer-Watt Gold Company, Inc., and filed as
Exhibit 45.10 to Form 10-K filed April 22, 1993
and incorporated herein by reference.
12 10 Employment Agreement effective September 1,
1993 between Fischer-Watt Gold Company, Inc., and
George Beattie whereby Fischer-Watt agrees to
employ Mr. Beattie for a two-year period as Chief
Executive Officer and filed as Exhibit 20.10 to
Form 10-K filed May 11, 1994 and incorporated
herein by reference.
13 10 Option Agreement between Greenstone Resources
Ltd., and Fischer-Watt Gold Company, Inc., dated
March 24, 1994, whereby Greenstone has the right
to purchase all of Fischer-Watt's interest in the
San Andres property in Honduras and filed as
Exhibit 23.10 to Form 10-K filed May 11, 1994 and
incorporated herein by reference.
14 10 Agreement to Assign Leases dated July 7, 1994
between Fischer-Watt Gold Company, Inc., and
Kennecott Exploration Company whereby Fischer-Watt
agrees to assign its interests in the Modoc
property located in Imperial County, California to
Kennecott, reserving a Net Smelter Return royalty.
This agreement was filed as Exhibit 22.10 to Form
10-Q filed September 13, 1994 and incorporated
herein by reference.
14
<PAGE>
Exhibit Item 601
No. Category Exhibit
- --- -------- -------
15 10 Letter agreement between Fischer-Watt Gold
Company, Inc., and La Cuesta International (LCI)
dated August 11, 1994 whereby LCI agrees to lease
the Oatman property located in Mohave County,
Arizona. This agreement was filed as Exhibit 23.10
to Form 10-Q filed September 13, 1994 and
incorporated herein by reference.
16 10 Option Agreement - Lock-up Agreement between
Fischer-Watt Gold Company, Inc., and Greenstone
Resources Ltd., dated October 17, 1994 whereby the
San Andres option agreement was amended to provide
for an early advance of $50,000 as partial payment
of the option in exchange for restrictions on the
disposition of Greenstone shares. This agreement
was filed as Exhibit 22.10 to Form 10-Q filed
December 14, 1994 and incorporated herein by
reference.
17 10 English translation of an Exploration Agreement
between Fischer-Watt's Mexican subsidiary, Minera
Montoro, S.A. de C.V. and Minera Cuicuilco, S.A.
de C.V. dated October 18, 1994 whereby Minera
Cuicuilco is granted the rights to explore the
Cerrito property in Baja California, Mexico and
was filed as Exhibit 23.10 to Form 10-Q filed
December 14, 1994 and incorporated herein by
reference.
18 10 Acquisition agreement dated November 10, 1994
among Greenstone Resources Canada Ltd., Greenstone
Resources Ltd., and Fischer-Watt Gold
Company, Inc., whereby the parties finalize the
Option Agreement of March 24, 1994 to purchase the
San Andres property in Honduras and modify the
Lock-Up Agreement dated October 17, 1994. This
agreement was filed as Exhibit 29.10 to Form 10-K
filed May 15, 1995 and incorporated herein by
reference.
19 10 Letter agreement dated February 28, 1995 between
Tombstone Explorations Co. Ltd., and Fischer-Watt
Gold Company, Inc., whereby Tombstone agrees to
purchase all of Fischer-Watt's rights to the Minas
de Oro property in Honduras. This agreement was
filed as Exhibit 30.10 to Form 10-K filed May 15,
1995 and incorporated herein by reference.
15
<PAGE>
Exhibit Item 601
No. Category Exhibit
- --- -------- -------
20 10 Letter agreement dated April 13, 1995 between
Begeyge Minera Limitada and Fischer-Watt Gold
Company, Inc., whereby Fischer-Watt will acquire
rights to the La Victoria, Honduras property. This
agreement was filed as Exhibit 31.10 to Form 10-K
filed May 15, 1995 and incorporated herein by
reference.
21 10 Option whereby Fischer-Watt Gold Company, Inc.,
grants Gerald D. Helgeson an option to purchase
100,000 shares of Fischer-Watt restricted common
stock. This option was filed as Exhibit 32.10 to
Form 10-K filed May 15, 1995 and incorporated
herein by reference.
22 10 Option whereby Fischer-Watt Gold Company, Inc.,
grants Larry J. Buchanan an option to purchase
100,000 shares of Fischer-Watt restricted common
stock. This option was filed as Exhibit 33.10 to
Form 10-K filed May 15, 1995 and incorporated
herein by reference.
23 10 Amendment dated April 20, 1995 to Agreement to
Assign Leases dated July 7, 1994 between
Fischer-Watt Gold Company, Inc., and Kennecott
Exploration Company whereby Fischer-Watt agrees to
assign its interests in the Modoc property located
in Imperial County, California to Kennecott. This
Amendment was filed as Exhibit 28.10 to Form
10-QSB filed June 14, 1995 and incorporated herein
by reference.
24 10 Asset Purchase Agreement dated May 16, 1995
between Fischer-Watt Gold Company, Inc., and
Cerenex Financial A.V.V., whereby the February 28,
1995 sale of Minas de Oro is closed. This Asset
Purchase Agreement was filed as Exhibit 29.10 to
Form 10-QSB filed June 13, 1995 and incorporated
herein by reference.
25 10 Option effective June 1, 1995, whereby
Fischer-Watt Gold Company, Inc., grants Gerald D.
Helgeson an option to purchase 200,000 shares of
Fischer-Watt restricted common stock. This Option
was filed as Exhibit 31.10 to Form 10-QSB filed
September 15, 1995 and incorporated herein by
reference.
26 10 Option effective June 1 1995, whereby Fischer-Watt
Gold Company, Inc., grants Larry J. Buchanan an
option to purchase 100,000 shares of Fischer-Watt
restricted common stock. This Option was filed as
Exhibit 32.10 to Form 10-QSB filed September 15,
1995 and incorporated herein by reference.
27 10 Option effective June 1, 1995 whereby Fischer-Watt
Gold Company, Inc., grants Anthony P. Taylor an
option to purchase 100,000 shares of Fischer-Watt
restricted common stock. This Option was filed as
Exhibit 33.10 to Form 10-QSB filed September 15,
1995 and incorporated herein by reference.
16
<PAGE>
Exhibit Item 601
No. Category Exhibit
- --- -------- -------
28 10 Loan Agreement dated August 28, 1995, between
Fischer-Watt Gold Company, Inc., and Great Basin
Management Company, Inc., whereby Fischer-Watt
agrees to loan Great Basin Management Company,
Inc. up to $108,000. This Loan Agreement was filed
as Exhibit 36.10 to Form 10-QSB filed September
15, 1995 and incorporated herein by reference.
29 10 Amendment dated October 31, 1995 to Loan agreement
dated August 28, 1995, between Fischer-Watt Gold
Company, Inc. and Great Basin Management Company,
Inc., whereby Fischer-Watt changes the dates of
the loan to Great Basin Management Company, Inc.
This Amendment was filed as Exhibit 33.10 to Form
10-QSB filed December 20, 1995 and incorporated
herein by reference.
30 10 Extension of time for payment of Secured
Promissory Note dated October 31, 1995 to the Loan
agreement dated August 28, 1995, between
Fischer-Watt Gold Company, Inc. and Great Basin
Management Company, Inc. whereby Fischer-Watt
agrees to extend the time for payment of the
Secured Promissory Note. This Extension of Time
for Payment was filed as Exhibit 34.10 to Form
10-QSB filed December 20, 1995 and incorporated
herein by reference.
31 10 Second Amendment dated November 30, 1995 to Loan
agreement dated August 28, 1995 between
Fischer-Watt Gold Company, Inc. and Great Basin
Management Company, Inc. whereby Fischer-Watt
changes the dates of the loan to Great Basin
Management Company, Inc. This Second Amendment was
filed as Exhibit 35.10 to Form 10-QSB filed
December 20, 1995 and incorporated herein by
reference.
32 10 Second Extension of Time for Payment of Secured
Promissory Note dated October 31, 1995, to the
loan agreement dated August 28, 1995, between
Fischer-Watt Gold Company, Inc., and Great Basin
Management Company, Inc. whereby Fischer-Watt
agrees to extend the time for payment of the
Secured Promissory Note. This Second Extension was
filed as Exhibit 36.10 to Form 10-QSB filed
December 20, 1995 and incorporated herein by
reference.
17
<PAGE>
Exhibit Item 601
No. Category Exhibit
- --- -------- -------
33 10 Promissory Note dated October 20, 1995 whereby
Greenstone Resources of Colombia Ltd., a wholly
owned Bermuda subsidiary of Fischer-Watt Gold
Company, Inc., promises to pay $300,000 to
Greenstone Resources, Ltd. This Promissory Note
was filed as Exhibit 37.10 to Form 10-QSB filed
December 20, 1995 and incorporated herein by
reference.
34 10 Option effective June 1, 1996, whereby
Fischer-Watt Gold Company, Inc., grants Gerald D.
Helgeson an option to purchase 100,000 shares of
Fischer-Watt restricted common stock. Filed as
Exhibit 31.10 to Form 10-KSB filed September 26,
1996 and incorporated herein by reference.
35 10 Option effective June 1, 1996 whereby
Fischer-Watt Gold Company, Inc., grants Anthony P.
Taylor an option to purchase 100,000 shares of
Fischer-Watt restricted common stock. Filed as
Exhibit 32.10 to Form 10-KSB filed September 26,
1996 and incorporated herein by reference.
36 10 Option effective June 1, 1996 whereby
Fischer-Watt Gold Company, Inc., grants Peter
Bojtos an option to purchase 100,000 shares of
Fischer-Watt restricted common stock. Filed as
Exhibit 33.10 to Form 10-KSB filed September 26,
1996 and incorporated herein by reference.
37 10 Purchase - Sale agreement between Compania Minera
Oronorte, S.A. and Nissho Iwai Corporation in
which Nissho Iwai Corporation agrees to buy gold
and silver concentrate produced at El Limon Mine
in Colombia. Filed as Exhibit 34.10 to Form 10-KSB
filed September 26, 1996 and incorporated herein
by reference.
38 10 Letter of Agreement dated November 13, 1995,
between Digger Resources, Inc. of Calgary,
Alberta, Canada and Great Basin Exploration and
Mining, Inc. regarding exploration and mining
joint venture of Tempo property, Lander County,
Nevada. Filed as Exhibit 35.10 to Form 10-KSB
filed September 26, 1996 and incorporated herein
by reference.
18
<PAGE>
Exhibit Item 601
No. Category Exhibit
- --- -------- -------
39 10 Joint Venture agreement dated July 25, 1996, and
Exhibit A to agreement, between Great Basin
Exploration and Mining, Inc. and Digger Resources,
Inc. regarding Tempo mineral property, Lander
County, Nevada. Filed as Exhibit 36.10 to Form
10-KSB filed September 26, 1996 and incorporated
herein by reference.
40 10 Mining Venture agreement between Great Basin
Exploration and Mining Company, Inc. and Hemlo
Gold Mines (USA), Inc. for exploration,
development and mining of property held by Great
Basin in Eureka County Nevada. Said property
described in Exhibit A to agreement. common stock.
Filed as Exhibit 37.10 to Form 10-KSB filed
September 26, 1996 and incorporated herein by
reference.
41 10 Mineral Lease Agreement and amendment thereto
between Great Basin Exploration and Mining
Company, Inc., and H. Walter Schull dated February
19, 1991 regarding the Coal Canyon property in
Eureka County, Nevada. Filed as Exhibit 38.10 to
Form 10-KSB filed September 26, 1996 and
incorporated herein by reference.
42 10 Mineral Lease Agreement between Great Basin
Exploration and Mining Company, Inc., and The Lyle
F. Campbell Trust dated October 14, 1994 regarding
the Tempo Mineral Prospect in Lander County,
Nevada. Filed as Exhibit 39.10 to Form 10-KSB
filed September 26, 1996 and incorporated herein
by reference.
43 10 Mineral Lease Agreement with amendment thereto
between Great Basin Exploration and Mining
Company, Inc., and The Lyle F. Campbell Trust
dated November 8,1993 regarding the Afgan Mineral
Prospect in Eureka County, Nevada. Filed as
Exhibit 40.10 to Form 10-KSB filed September 26,
1996 and incorporated herein by reference.
44 10 Participation Agreement between Great Basin
Exploration and Mining Company, Inc., and Serem
Gatro Canada Inc., dated May 31, 1995 regarding
the right of Serem Gatro Canada Inc., to elect to
acquire a Participation Interest in properties in
which Great Basin Exploration and Mining Company,
Inc., has an interest. Filed as Exhibit 41.10 to
Form 10-KSB filed September 26, 1996 and
incorporated herein by reference.
45 10 Mineral Lease Agreement between Great Basin
Exploration and Mining Company, Inc., and Edward
L. Devenyns and David R. Ernst dated November 8,
1992 regarding the Red Canyon Mineral Prospect in
Eureka County, Nevada. Filed as Exhibit 42.10 to
Form 10-KSB filed September 26, 1996 and
incorporated herein by reference.
19
<PAGE>
Exhibit Item 601
No. Category Exhibit
- --- -------- -------
46 10 Joint Venture operating agreement dated January 1,
1996, between Cominco American, Inc. and Great
Basin Exploration and Mining Company, Inc. known
as the "Afgan-Kobeh Joint Venture". Property
described in Exhibit A. Filed as Exhibit 43.10 to
Form 10-KSB filed September 26, 1996 and
incorporated herein by reference.
47 10 Amendment to Mineral Lease between Walter Schull
and Mireille Schull and Great Basin Exploration
and Mining Company dated July 31, 1996. Regarding
the Coal Canyon property.
48 10 Promissory note dated September 30, 1996, whereby
Fischer-Watt Gold Company, Inc. promises to pay
$700,000 to Kennecott Exploration Company, Inc.
49 27 Financial Data Schedule for the three month period
ended April 30 ,1996.
50 99 Minutes of Special Meeting of Board of Directors
of Fischer-Watt Gold Company, Inc., dated October
19, 1994, whereby George Beattie's employment
contract dated September 1, 1993 is extended to
September 1, 1997. These minutes were filed as
Exhibit 28.99 to Form 10-K filed May 15, 1995 and
incorporated herein by reference.
20
<PAGE>
(b) Reports on Form 8-K
During the quarter ended April 30, 1996,
1. The Registrant filed a Current Report on Form 8-K on March 13, 1996,
reporting that on March 12, 1996 the Company gave notice that it has made an
offering of securities not registered under the Securities Act of 1933 in the
form of a news release dated March 12, 1996.
2. The Registrant filed a Current Report on Form 8-K on April 3, 1996
reporting that on March 29, 1996 the company signed an engagement letter with
BDO Seidman, LLP.
SIGNATURES
In accordance to the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
FISCHER-WATT GOLD COMPANY, INC.
October 17, 1996
By /s/ George Beattie
(Signature)
George Beattie, President,
Chief Executive Officer
(Principal Executive Officer),
Chairman of the Board and
Director
October 17, 1996 By /s/ Michele D. Wood
(Signature)
Michele D. Wood,
Chief Financial Officer
(Principal Financial and
Accounting Officer)
21
MINING PROPERTY PURCHASE AGREEMENT
THIS MINING PURCHASE AGREEMENT (this "Agreement ) is entered into as of
this 30th day of September, 1996 by and between Kennecott Exploration Company, a
Delaware Company ("KEC") and Fischer-Watt Gold Company, Inc., a Nevada
corporation ("FWG").
RECITALS
KEC owns certain unpatented mining claims in Esmeralda County, Nevada, more
particularly described on Exhibit A attached hereto and made a part of hereof
(the "Property"), which FWG desires to purchase from KEC, on the terms and
conditions herein.
NOW, THEREFORE, in consideration of the foregoing recital and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree to as follows:
1. Documents to be Delivered at Closing. At closing, FWG shall deliver to
KEC a Promissory Note in the amount of US$700,000 substantially in the form of
Exhibit C, as the purchase price for the Property, which Promissory Note is
payable under certain conditions by the issuance of 1,000,000 (one million)
shares of FWG common stock (the "Shares"). Simultaneously, KEC shall deliver to
FWG a Quit-claim Deed, substantially in the form attached hereto as Exhibit B,
conveying all of KEC's rights, titles, and interests in the Property to FWG,
2. Date of Closing. The closing shall occur before October 1, 1996 at 10:00
a.m. at the offices of Parsons Behle & Latimer in Salt Lake city, Utah, unless
the parties otherwise agree.
3. Representations and Warranties of the Parties
a. FWG represents and warrants to KEC that the transactions
contemplated herein do not violate the Articles of Incorporation or Bylaws of
FWG , or Nevada State Law, and that it has taken all corporate action necessary
to consummate the transaction contemplated by this Agreement and to perform its
obligations hereunder.
b. Each party represents and warrants to the other party that it is a
duly organized, validly existing corporation in good standing under the laws of
its state of incorporation, that it has the full corporate power and authority
to enter into and perform this Agreement, and that the undersigned are
authorized to enter into and perform this Agreement, and that the undersigned
are authorized to execute this Agreement on behalf of the corporation.
<PAGE>
c. Each party represents and warrants to the other party that this
Agreement does not violate or breach the terms of any agreement, instrument, or
arrangement to which it is a party.
d. KEC represents and warrants that the federal claim maintenance fees
for the 1996-1997 assessment year were timely paid for the unpatented mining
claims that comprise the Property, but makes no other representations or
warranties on the Property,
e. Each of the representations and warranties set forth above shall be
true and correct as of the date of the closing with the same force and effect as
though made at that time, and shall survive for a period of one year from the
date of closing.
f. KEC representing and confirms with FWG that it: (1) has such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of an investment in the Shares; (2) if the
Promissory Note is paid in the form of the Shares, will receive the Shares in
reliance on the exemption from registration contained in Section 4(2) of the
Securities Act of 1933 (the "Securities Act"), for investment and without any
view to the distribution thereof in any manner that is in violation of the
Securities Act; (3) is aware of limits on resale imposed by virtue of the nature
of the transaction pursuant to which the Shares, if issued, will be received;
(4) acknowledges that FWG has made available to it and it has received and
carefully reviewed all materials and information concerning FWG that it deems
material to making an informed investment decision and to evaluate the merits
and risks of an investment in securities of FWG; and (5) acknowledges that the
certificates representing the Shares when and if delivered, may have appropriate
orders restricting transfer placed against them on the records of the transfer
agent for such securities, and may have placed upon them the following legend:
THE SECURITIES REPRESENTED HEREBY HAVE BEEN ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES
SECURITIES ACT OF 1933. THEY MAY NOT BE TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS THE TRANSFER, IN THE
MANNER PROPOSED, DOES NOT VIOLATE THE REGISTRATION REQUIREMENTS
OF SAID ACT.
4. Consents and Approvals. No consent, approval, or authorization of or
declaration, filing or registration with any governmental or regulatory
authority, or any other person or entity is required to be made or obtained by
FWG prior to closing in connection with the execution, delivery and performance
of this Agreement and the consummation of the transaction contemplated by this
Agreement.
<PAGE>
5. Responsible for Own Actions. Each party shall be responsible only for
its own acts and omissions with respect to the Property and shall not be
responsible for the acts or omissions of the other party.
6. Registration Rights. With respect to any Shares issued as payment of the
Promissory Note, KEC shall have the right to have such Shares included in any
public registration statement filed by FWG with the United States Securities and
Exchange Commission in which such Shares could be included, for a period of one
year after the date of the delivery of the Shares.
7. Default-Notice and Cure. In the event that either party is in default of
any terms of this Agreement, the non-defaulting party shall give the defaulting
party written notice of the default specifying the details of the default. The
defaulting party shall have 15 days from receipt of such notice to remedy the
default or give written notice to the non-defaulting party setting forth reasons
why it believes it is not in default.
8. Counterpart Signatures. This Agreement may be executed in one or more
counterparts that when taken together shall constitute one document. For
purposes of this Agreement, the delivery of a counterpart signature by facsimile
transmission shall constitute delivery of an original counterpart signature.
9. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Utah, excluding any conflict of law
provisions that would require the application of the law of any other
jurisdiction.
10. Arbitration. All claims and conflicts arising under this Agreement
shall be subject to and finally resolved by binding arbitration in accordance
with the rules of the American Arbitration Association then pertaining. The
arbitration shall take place in Salt Lake City by one qualified arbitrator
appointed by the Association.
11. Limitation of Actions and Damages. No action arising under this
Agreement shall be valid unless a claim is made within one year after the date
of this Agreement, or, in the case of the registration rights under Section 6,
within one year after the termination of such rights. Neither party shall have
liability for consequential, incidental, or punitive damages, howsoever
characterized, with respect to any cause of action arising under this Agreement.
12. Severability. The provisions of this Agreement are severable, and
should any provision hereof be void, voidable, unenforceable, or invalid, such
provision shall not affect the other provisions of this Agreement.
13. Amendment. This Agreement may not be modified except by an instrument
in writing signed by both parties.
<PAGE>
14. No Brokers. The parties represent and warrant to each other that no
broker or finder acted for it or is entitled to any fee or is entitled to any
fee or commission with the transactions contemplated herein.
15. Entire Agreement. This Agreement constitutes the entire agreement of
the parties with respect to the subject matter contained herein, and all prior
negotiations, agreements or understandings relating to its subject matter are
hereby superseded and are no longer of any force or effect.
This Agreement has been executed to be effective as of the date first above
written,
Kennecott Exploration Company, Inc. Fischer-Watt Gold Company, Inc.
By Kenneth Hecker By George Beattie
--------------------------- ----------------------------
Its Commercial Director Its President
--------------------------- ----------------------------
FOURTH AMENDMENT TO MINERAL LEASE WITH OPTION TO PURCHASE
THIS FOURTH AMENDMENT to that Mineral Lease Agreement with Option to Purchase
dated February 19, 1991 is executed this 31st day of July, 1996 between H,
Walter Schull, Manager, and Mireille Schull, Owner, (hereinafter referred to as
"Lessor"), and Great Basin Exploration & Mining Co., Inc., a Nevada corporation
(hereinafter referred to as "Lessee").
RECITALS
A. Lessor and Lessee are parties to the following:
"MINERAL LEASE AGREEMENT WITH OPTION TO PURCHASE Coal Canyon Property"
dated February 19, 1991 (hereinafter referred to as the "Mineral Lease
Agreement").
"AMENDMENT OF LEASE" dated January 13, 1991 (hereinafter referred to as the
"First Amendment").
"SECOND AMENDMENT TO MINERAL LEASE AGREEMENT WITH OPTION TO PURCHASE Coal
Canyon Property" dated May 17, 1994 (hereinafter referred to as the "Second
Amendment"),
"THIRD AMENDMENT TO MINERAL LEASE WITH OPTION TO PURCHASE Coal Canyon
Property, Eureka County, Nevada" entered the 15th day of February, 1996
(hereinafter referred to as the "Third Amendment").
(the foregoing Mineral Lease Agreement, First Amendment, Second Amendment
and Third Amendment hereinafter collectively referred to as the "Mineral Lease
Agreement as Amended").
B. Lessor and Lessee desire to further amend the Mineral Lease Agreement as
Amended.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and of the mutual benefits
to be derived, Lessor and Lessee agree as follows:
1. The last sentence of the first paragraph of Section 3 of the Mineral
Lease Agreement is hereby revised to read as follows:
"Any and all payments made by LESSEE to LESSOR pursuant to Section 5
hereof, and all costs, if any, incurred by LESSEE for which LESSOR is liable
pursuant to paragraph b of Section 7 hereof shall be credited against the
purchase price."
<PAGE>
2. The last sentence of paragraph b of Section 5 of the Mineral Lease
Agreement is hereby amended to read:
"The term 'Gross Returns" in any calendar quarter shall mean the amount of
earned revenues payable to LESSEE by any smelter, refinery, or other arm's
length purchaser of any and all Mineral Substances from the Premises, less any
smelting and sampling charges charged to LESSEE by said purchaser."
3. Paragraph d of Section 5 of the Mineral Lease Agreement is hereby
amended to read:
"d. Adjustment for Inflation - The purchase price as set forth in Section 3
shall be subject to escalation based upon the Consumer Price Index published by
the Bureau of Labor Statistics of the United States Department of Labor. The
applicable amount due LESSOR shall be multiplied by a percentage equal to 100,
plus the percentage increase in the Consumer Index from the effective date of
the Agreement, to the date of the close of the calendar quarter during which the
applicable payment is due."
4. Section 1 of the First Amendment and Section 1 of the Third Amendment
are hereby deleted and paragraph a of Section 5 of the Mineral Lease Agreement
is hereby amended to read as follows:
"A. Rental - Subject to LESSEE's right to terminate this Agreement, LESSEE
shall pay to LESSOR rental in the following amounts:
$15,000.00 on or before March 18, 1991,
$15,000.00 on or before October 1, 1991,
$30,000.00 between January 1 and January 15, 1992,
$20,000.00 between January 1 and January 15, 1993,
$20,000.00 between January 1 and January 15, 1994,
$20,000.00 between January 1 and January 15, 1995,
and of each year thereafter while the
Mineral Lease Agreement as Amended is
in effect.
LESSEE's obligation to make the rental payments shall terminate upon
the earlier of the commencement of payment of production royalties or upon its
exercise of the option to purchase the Premises, and all rental payments to
LESSOR shall be credited against the purchase price as calculated in Section 3."
5. Sction 2 of the first Amendment is hereby deleted and LESSOR and LESSEE
agree that Paragraph d of Section 9 of the Mineral Lease Agreement shall apply
only while federal or state law requires annual assessment work to be performed
on the Premises. When annual assessment is not required and the payment of
holding, rental or filing fees and filing of documents to federal state or
county offices or agencies is required, LESSEE will pay such fees and make such
filings on or prior to the date such payments and filings are required.
<PAGE>
If the Mineral Lease Agreement is hereafter terminated by either
party, pursuant to Section 10 thereof, no further assessment work or filings or
payment of fees will be required by LESSEE.
6. Section 2 of the Third Amendment is hereby revised to read as follows:
"The Mineral Lease Agreement As Amended is hereby amended to effect a
work commitment by LESSEE of $100,000.00 to be spent between January 1, 1996 and
December 31, 1996 and $200,000.00 to be spent between January 1, 1997 and
December 31, 1997 and each year thereafter. The yearly work expenditures
qualified as fulfilling the work commitment shall be limited to all costs
incurred in actual work on the Coal Canyon Mineral prospect in drilling,
trenching, excavation, mining, road building, surveying, mapping, and
geological, geochemical and geophysical programs conducted on the Coal Canyon
Mineral Prospect as well as assaying and metallurgical testing of ores extracted
from the Coal Canyon Mineral Prospect which may be conducted at appropriate
facilities off the Coal Canyon Mineral Prospect. Expenditures shall
include wages and salaries paid to engineers, geologists, laborers and
technicians for actual time spent in exploration, development and mining of the
Coal Canyon Mineral Prospect. Direct overhead, such as lodging, meals and travel
expenses (but expressly excluding any charge for office or administrative
expenses) shall be limited to ten percent (10%) of the yearly work requirement.
Any work expenditures in excess of the work commitment in any calendar year
shall he applied to the work commitment for the following calendar year. The
said work commitments shall terminate in the event the Mineral Lease Agreement
As Amended is terminated."
7. Except as specifically amended in this Fourth Amendment, the Mineral
Lease Agreement As Amended remains in full force and effect. LESSOR and LESSEE
certify that the Mineral Lease Agreement As Amended is in good standing and in
full force and effect, LESSEE is not in default in any of the terms of the
Mineral Lease Agreement As Amended and LESSOR and LESSEE know of no
circumstances presently existing that would cause LESSEE to be in default.
8. All denominations of money in the Mineral Lease Agreement As Amended are
in United States currency.
IN WITNESS WHEREOF, the parties hereto have executed this Fourth Amendment to
the Mineral Lease Agreement as of the date first above written.
LESSEE LESSOR
GREAT BASIN EXPLORATION &
MINING CO., INC.
By George Beattie H. Walter Schull
----------------------------- -----------------------------
Title President Manager
13 Aug. 1996 July 31, 1996
STATE OF NEVADA }
} ss
COUNTY OF WASHOE }
The foregoing instrument was acknowledged before me on this ---- day of------ ,
1996 by ----------------------------------, ------------------ of Great Basin
Exploration & Mining Co., Inc., a Nevada corporation, on behalf of the
Corporation.
- ---------------------------------
My Commission Expires:
Notary Public
STATE OF NEVADA }
} ss
COUNTY OF WASHOE }
The foregoing instrument was acknowledged before me on this ---- day of -------,
1996 by H. Walter Schull who acknowledged that he executed the within instrument
for the purposes contained herein.
- -----------------------------------
My Commission Expires:
Notary Public
Promissory Note
US$700,000.00 Salt Lake City, Utah
September 30, 1996 Non-Negotiable, Non-Transferrable
FOR VALUE RECEIVED, Fischer-Watt Gold Company, Inc., a Nevada corporation
with offices at 1410 Cherrywood Drive, Coeur d'Alene, Idaho 83814 ("FWG") hereby
promised to pay to Kennecott Exploration Company, Inc. ("KEC"), at its office
located at 225 North 2200 West, Salt Late City, Utah 84116, the principal sum of
US$700,000.00, with interest thereon at an annual interest rate equal to the
prime or base rate as announced from time to time by The Chase Manhattan Bank
(National Association) at its principal New York, New York office (the "Prime"
rate), or at the highest legal rate, if less. Such payment of principal and
interest shall be calculated on the basis of a month of 30 days and a year of
360 days.
FWG may repay this Note in whole but not in part upon at least ten (10)
days prior notice to KEC.
Each of the following shall be a default under this Promissory Note:
(i) The failure of FWG to pay principal and interest when due; or
(ii) If FWG shall generally not pay its debts as such debts become due, or
shall admit in writing its inability to pay its debts generally, or shall
make a general assignment for the benefit of creditors; or if any
proceeding is instituted by or against FWG seeking to adjudicate it a
bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its
debt under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors (but in case of any involuntary proceeding, the same is
not dismissed within 60 days), or seeking the entry of an order for relief
or the appointment of a receiver, trustee, or similar official for it or
for any substantial part of its property; or if FWG takes corporate action
to authorize any of the actions set forth above in this subparagraph; or if
any analogous event or proceeding occurs or is instituted in any
jurisdiction with respect to FWG.
In the event of any default under this Promissory Note then the principal
and interest remaining unpaid as of such date shall be immediately and
automatically due and payable in full and such sums shall bear default interest
from the date of default at an annual rate equal to the Prime rate plus two
percent (2%), or at the highest legal rate, if less. Failure of KEC to exercise
any right or remedy with respect to any default shall not be deemed to be a
waiver of that or any subsequent default. Upon default, the undersigned shall
pay all costs of collection and reasonable attorneys' fees paid or incurred in
enforcing this Promissory Note.
<PAGE>
The undersigned hereby waives presentment for payment, protest, notice
of non payment and protest, and agrees to any extension of time of payment and
partial payment before, at or after maturity,
At the option of FWG and upon 10 days' prior notice to KEC, and provided to
default has occurred and is then continuing, the payment of principal, but not
interest, to be paid under this Promissory Note shall be payable by the delivery
of one million shares of fully paid and nonassessable common stock of FWG.
Provided, however, that FWG shall not have the right to exercise the foregoing
option if the issuance of such shares, plus all outstanding shares of common
stock by FWG then held by KEC and its affiliates, would result in the number of
shares held by KEC and its affiliates equaling or exceeding 10% of the total
outstanding shares of common stock of FWG. KEC shall have such registration
rights with respect to such shares as provided in the Mining Property Purchase
Agreement between the parties, dated September 30, 1996,
THIS PROMISSORY NOTE SHALL BE GOVERNED BY THE LAWS OF THE STATE OF UTAH,
EXCLUDING ANY CONFLICT OF LAW PRINCIPLES THAT WOULD REQUIRE THE APPLICATION OF
THE LAW OF ANY OTHER JURISDICTION.
IN WITNESS WHEREOF, the undersigned has executed this Promissory Note this
30 day of September, 1996,
Fischer-Watt Gold Company, Inc.
By: George Beattie
------------------------------
Title: President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED APRIL 30, 1996 CONTAINED IN FORM
10-QSB FOR THE QUARTERLY PERIOD ENDED APRIL 30, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1996
<PERIOD-START> FEB-01-1996
<PERIOD-END> APR-30-1996
<CASH> 4,121
<SECURITIES> 0
<RECEIVABLES> 1,041
<ALLOWANCES> 0
<INVENTORY> 196
<CURRENT-ASSETS> 5,411
<PP&E> 1,639
<DEPRECIATION> 110
<TOTAL-ASSETS> 9,970
<CURRENT-LIABILITIES> 2,341
<BONDS> 0
0
0
<COMMON> 31
<OTHER-SE> 7,598
<TOTAL-LIABILITY-AND-EQUITY> 9,970
<SALES> 1,057
<TOTAL-REVENUES> 1,057
<CGS> 1,533
<TOTAL-COSTS> 1,871
<OTHER-EXPENSES> 115
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (26)
<INCOME-PRETAX> (903)
<INCOME-TAX> 0
<INCOME-CONTINUING> (903)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (903)
<EPS-PRIMARY> (.04)
<EPS-DILUTED> (.04)
</TABLE>
